Ford and BMW warn against UK exit from EU as David Cameron readies historic speech

Two of Britain's biggest car makers, Ford and BMW, have warned that a UK exit
from the European Union would be "devastating" for the UK economy,
heaping pressure on the Prime Minister ahead of a critical speech due this
week

The UK car industry has been of the UK's few economic success stories since the financial crisis. Photo: Reuters

David Cameron was expected to deliver one of the most keenly awaited political speeches in recent years on Friday, but it was cancelled because of the Algerian hostage crisis. However, excerpts show that the Conservative leader is prepared to raise the prospect of Britain leaving the EU without major changes to the relationship.

"All countries should have their sovereignty, but don't discuss leaving a trading partner where 50pc of your exports go," said Stephen Odell, chief executive of Ford in Europe. "That would be devastating for the UK economy."

While surveys show that about half of UK businesses favour renegotiating Britain's membership, the threat of a complete withdrawal has triggered alarm among some of the world's largest companies and caused diplomatic tensions with allies such as the US.

"The UK not only has to be part of Europe. It has to be a fundamentally active part of Europe," said Ian Robertson, global head of sales at BMW and a member of the board of the German company. "To think about the UK being outside of Europe doesn't make sense."

The warning is given greater weight as the car industry has been one of Britain's few economic success stories since the financial crisis. BMW and Ford together employ about 20,000 people in the UK.

Britain exported a record number of cars last year, and a senior executive from Honda revealed to The Daily Telegraph last week that leaving the EU would damage the UK economy's emerging position as an export hub for the industry.

Despite the headwinds that the euro crisis has generated for Britain over the past two years, supporters of the UK's membership point to the access it gives to the largest single market in the world.

"The thought of a UK outside of Europe with different trade agreements – sorry, it's not the way forward," said BMW's Mr Robertson. "Around the world, the biggest global trading blocs are getting bigger and we need to be part of one of them."

The concern from the car makers echoes that of senior bankers in the City, who told The Sunday Telegraph last month that an exit from the EU could prompt foreign banks to reduce their operations in London. US and Japanese companies have long seen the UK as a gateway to Europe, as well as an important market in its own right.

The question of Britain's relationship with Europe is complicated by the expected push this year by the US and the EU to begin negotiations on a major free trade agreement between the regions.

Mr Cameron is now expected to deliver his EU speech in the next few days. He is expected to stress that he would prefer Britain to stay in, but is prepared to contemplate leaving if there is no change in the relationship.